Exclusive: NRA and Former PR Firm's Attempted Settlement Talks Break Down, Making Court Battle Almost Certain

Attempted settlement talks between the National Rifle Association and its estranged PR firm have collapsed, raising the likelihood that controversies surrounding the gun-rights group will end up in a fiercely contested courtroom battle.

In two separate statements provided to Newsweek Friday evening, both the NRA and its former PR firm, Ackerman McQueen, offered diverging accounts of how attempted out-of-court negotiations to resolve the costly legal battle brewing between the two organizations have broken down in recent months.

"Although we are not typically inclined to discuss confidential settlement communications, nor can we let misstatements go unanswered," Michael J. Collins, counsel to the NRA, said in a written statement. "After Ackerman tried and failed to coax the NRA into settlement negotiations, the NRA made one responsive overture—that died on the vine when additional information about the agency's misconduct came to light."

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Wayne LaPierre, Executive Vice President and Chief Executive Officer of the NRA, arrives prior to a speech by US President Donald Trump at the National Rifle Association (NRA) Annual Meeting at Lucas Oil Stadium in Indianapolis, Indiana, April 26, 2019. The NRA and its former PR firm, Ackerman McQueen, tried to engage in settlement talks to resolve costly litigation between the two organizations. SAUL LOEB/Getty

Ackerman responded in kind, roundly rejecting Collins' statement as "false."

"With the Brewer Law Firm's documented history of ethical issues and intimidation tactics, it doesn't surprise anyone they are willing to peddle another lie to mislead public opinion," the firm said in a written statement. "The facts regarding settlement discussions are simple: Mr. Collins initiated contact with Ackerman McQueen attorneys to talk settlement with a stipulation that only one attorney and one client from each side should meet. They chose to designate Attorney William Brewer and Wayne LaPierre. When we responded with our attendees, they stopped their pursuit of a meeting."

The NRA did not respond to a follow-up question seeking clarification about the "additional information" about Ackerman it is alleging came to light and scuttled settlement talks.

The relationship between the NRA and Ackerman began to gradually fray over the past year as the gun-rights group tried to audit the firm's billing practices while the NRA was facing the prospect of an investigation into its tax-exempt status. The NRA has alleged that Ackerman, while it was still performing as the group's PR firm, stonewalled attempts to review financial statements. Ackerman has denied those accusations and further alleged that the NRA itself has refused to turn over receipts necessary to produce the very documentation the NRA was seeking.

Their falling-out culminated in the NRA filing two state-court lawsuits in Virginia, reiterating many of these allegations and also accusing Ackerman of participating in an effort to oust its chief executive, Wayne LaPierre, and selectively leak information to the media. One of the lawsuits asks for an award of at least $40 million in damages. Ackerman responded to the first suit with its own $50 million counterclaim. And last month, the NRA once more sued Ackerman, this time in federal court in Dallas, further deteriorating the relationship between the two organizations.

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A sign featuring the former President of the National Rifle Association Lt Col. Oliver L. North hangs outside of the Indiana Convention Center in downtown Indianapolis, Indiana, April 27,2019 during the 2019 National Rifle Association Annual Meetings. The NRA is engaged in costly lawsuits against its former PR firm, Ackerman McQueen, which allege that North participated in an attempted coup against NRA CEO Wayne LaPierre. SETH HERALD/Getty

News of the failed settlement efforts marks another significant turn in the saga of the NRA's massive governance scandal, which pitted the non-profit against many of its longtime allies, including Ackerman, which enjoyed a decades-long relationship with the NRA and helped to construct the gun-rights group into the indomitable force that it is today. Ackerman has largely been cited for honing the NRA's public image, turning LaPierre into the national face of Second Amendment advocacy. The firm was also responsible for the production of NRATV, the now-defunct streaming platform which became a flashpoint in the culture wars.

In 2017, Ackerman received $40 million from the NRA for its services, a number that includes subsidiaries and affiliates.

"The NRA sued Ackerman McQueen because we believe the agency owes the NRA tens of millions of dollars," Collins added. "Beyond that, it now appears that Ackerman is guilty of numerous other torts. The NRA looks forward to trial."

In its statement, Ackerman similarly relished the prospect of resolving the disputes before a judge and jury, suggesting that with the NRA's fiery comments on Friday, it was trying to conceal an underlying fear of courtroom litigation.

"We note, with interest, their boast about looking forward to trial. Their conduct to date—in the litigation they initiated—demonstrates the opposite, as they have continued to employ repeated delay tactics," the firm said. "With the collapse of the NRA's settlement effort, Ackerman McQueen is the party eagerly preparing to try the case."

The New York Attorney General eventually did launch a formal probe into the NRA, which was followed by an announcement from the Attorney General for the District of Columbia announcing a similar inquiry into the NRA's charitable arm. Another investigation undertaken by the New York Department of Financial Services is also reportedly underway.

The NRA is facing a series of costly, uphill legal battles related to the governance scandal that has shaken the group since its annual meeting in April. After the ouster of its then-president, Lt. Col. Oliver North, the numerous scandals once confined to organization insiders spilled out into the open, revealing tense disputes between leadership and a rogue faction of NRA board members and associates who had been pushing for reform.

Amid the legal disputes, the NRA has sent fundraising letters to membership warning of potentially terminal consequences. "NOTICE OF SHUTDOWN, CRITICAL UPDATE," one envelope reads. Carolyn Meadows, the NRA's president, has defended the financial outlook of the organization.

Seven board members have resigned since May, and three of them specifically referenced recalcitrance from NRA leadership as the reason for their decision. The members, Esther Schneider, Timothy Knight and Sean Maloney, alleged a pattern of secrecy and obstruction from senior NRA officials who have reportedly rebuffed attempts at basic oversight.

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A picture of Executive Vice President Wayne LaPierre is seen at the National Rifle Association (NRA) booth during CPAC 2019 February 28, 2019 in National Harbor, Maryland. The group's finances are coming into clearer picture as litigation between the NRA and its former PR firm plays out in several jurisdictions. Alex Wong/Getty

In a leaked internal memo from April which was written by North and Richard Childress, one of the seven board members who resigned, it was revealed that the NRA's outside counsel, William A. Brewer III, received payments from the non-profit totaling $24 million over a 13-month period. During the first quarter of 2019, Brewer's firm was said to have earned just under $100,000 a day.

Brewer is the chief architect behind much of the NRA's current legal strategy. A Democrat from New York, he has previously been the subject of accusations of financial mismanagement from former top NRA officials.

In the memo, North and Childress alleged that Brewer told them he thought the NRA has been "lax" about overseeing its billing practices. The pair further alleged that this mismanagement was "extant with respect to the Brewer firm's past and now accelerating legal fees."

ProPublica reported in July that Emily Cummins, a former senior official in the organization's treasury, had written a memo during her tenure documenting concerns that Brewer was stymying the work of NRA accountants and charging inordinate legal fees.

As Brewer has shaped the NRA's ongoing legal strategy, the group's mounting legal obligations have added to its financial obligations, contributing to the drain of the NRA's bank accounts.

Over the past three years, the NRA's net assets have been in decline, according to a financial audit filed with regulators in North Carolina, news of which was first reported by the good-governance non-profit CREW.

LaPierre is set to be deposed by Ackerman's lawyers in just a matter of days as part of his organization's Virginia litigation with the firm. A judge recently ruled that Brewer won't be able to review some documentation Ackerman must turn over to the NRA as part of the discovery process. Ackerman had argued that Brewer is a potential business competitor, and therefore some of this information could be considered proprietary.

Exclusive: NRA and Former PR Firm's Attempted Settlement Talks Break Down, Making Court Battle Almost Certain | U.S.